Focusing on a single outcome can rob you of some tremendous moneymaking opportunities. It’s why I’ve learned to never get too bearish or too bullish.
Right now, everybody hates stocks and loves bonds. This is the exact opposite of what we saw back in 2000. At that time, “blue-chip” stocks were trading at 40+ times earnings (i.e., well-loved), and 10-year government bonds were sporting 6% yields (i.e., despised).
Today, 10-year government bonds are yielding about 1.4-1.5% (i.e., well-loved), while the S&P 500 trades with a cheap price-to-earnings (P/E) ratio under 14 and a 2% dividend yield (i.e., despised).
Many blue-chip businesses—companies that have earnings histories spanning 40, 50, and 60 years—are carrying thick dividend yields in excess of 3-4%.
The only way that bonds can outperform stocks over the next 10 years is if we suddenly drop into a deep and prolonged period of deflation. (This would punish stock prices lower as earnings came under fire from a collapse in demand.)
If you think this is coming, you are making the right move being in bonds over stocks.